Helping The World Become Share Market Aware. 

Despite what many professionals will tell you, the stock market does not always go up.  In today’s market you need to be able to identify stock market trends as they are happening – both up and down – and be able to take advantage of them.  And that’s where we can help.

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January 24, 2010   Posted in: Articles On Building Wealth  3 Comments

Behavioural Finance: Uncertainty Leads To Fear Which Leads To…

This Market Watch Weekly is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week we delve into a bit of behavioural finance, and look at two major economic events unfolding at the end of 2012 that will affect investor psychology.  We look at how it will affect our psychology and what we can do as this occurs.

We also look at charts from the S&P 500, Dow Jones, All Ordinaries, and FTSE, and some simple trend following techniques.

http://youtu.be/uOvyzIa8Y6g

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Hope you enjoy and have an amazing week in the markets!

Happy trending,

Dave McLachlan

November 18, 2012  Tags: , , , , , , , ,   Posted in: Market Analysis, Market Watch Weekly  No Comments

Chart Watch – FTSE Resistance, Dow Jones Support, ASX Strongest Sectors and Breakout Trades

This Market Watch Weekly is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week we look at the whole world according to the charts!  It has been a while, so we’ve got the FTSE in Europe, the Dow Jones in America, the Shanghai Composite in China, and then the All Ordinaries and the ASX strongest sectors.

Once again, strongest sectors do lead us to some high probability trades.  Nothing in life is guaranteed, and especially nothing in the stock market!  So our best friend becomes some simple mathematics and a little thing called probability.

Increasing Your Probability Of Success

If nothing in the stock market is guaranteed, then how can we increase our porbabilty of success?  The first way is to have a tested trading plan.  Choose mechanical entry and exit signals, for example one might buy as price closes above a bollinger band range, and sell when it closes below it – commonly known as a bollinger band breakout trade.  These rules are set in stone for you, there is no discretion involved as discretion is almost impossible to test properly.

Look back over history as far as you can, preferrably 10 years or more, and note the places you would buy and sell according to your entry and exit rules.  If you can arrange more than 50% wins, and more than 2 to 1 profit to loss, you just might have an edge in the markets and a profitable trading system you can use.

There is of course more to this tale, because with probability comes possible losing streaks – the lower your win percentage the higher your possible losing streak, which leads us to discovering our best amount of risk to use per trade.  Students of the Risk and Money Management module at this site already have an excellent handle on this.

How Do I Increase My Probability?

There are hundreds of different ways to trade and invest successfully – my way is just one way.  I personally search for trades only in the strong sectors within our stock market.  Do I miss some great trades in other sectors because of this?  Of course!  But I’m not interested in being right all the time.  I’ve been beaten around by the market too often to try and impose my own will onto it.  I know that if I can be right 50% of the time or more, I can outperform.  Even less than 50% of the time really, I can still outperform if I cut my losses properly and let my winners ride.

Within the strong sectors, I search for strong stocks, or more accurately stocks that are breaking out and upwards.  My hope is here that the momentum of the breakout will carry the stock up, as well as the momentum of the strength of the sector.  This is how I aim to increase my probabilty of success.

Market Watch and World Market Analysis This Week!

Here is this week’s market watch.  Please enjoy!

http://youtu.be/fapU0QsNkFw

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Hope you enjoy and have an amazing week in the markets!

Happy trending,

Dave McLachlan

October 28, 2012  Tags: , , , , , , ,   Posted in: Market Analysis, Market Watch Weekly  No Comments

Gold Stocks: The Ultimate Risk-On Trade Of 2012? Plus Good (or Bad) News For Mum And Dad Investors: You Decide

This Market Watch Weekly is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

Can’t see the video?  YouTube link here: http://youtu.be/TKru65sIslc

The Fed Goes All In

This week we look at the Market’s reaction to the Fed decision on Thursday to buy 40 Billion dollars worth of mortgage backed securities every single month until it decides that employment is back on track.  Yes, that’s 40 Billion, with a B.  Every month.  Anyway the real thing I was looking for was how the stock market reacted to the news, as you can have good news and a bad reaction – it all depends on the sentiment at the time.  The reaction was good, and markets have taken off on another up move.  Essentially, it’s given a pretty strong “Risk-On” looking move, and as usual some sectors are outperforming others.

One major sector that is moving up strongly is the Gold price, and subsequently Gold producers.  This trade interests me because Gold is traditionally seen as a “hedge” or a safe haven trade, yet because money is flowing into this sector now it is also becoming a momentum play.

Even though the Materials sector itself is still in the doldrums (think Iron Ore companies like Fortescue that are dragging it down) I found a quick list of around 18 Gold producers that you and I can check out and possibly take advantage of.  Some of them have taken off already (i.e. OGC and NST) but others made entry signals on Friday.  Very convenient!  Here they are:

AQG, BDR, GRY, IGO, IGR, NCM, NST, OGC, PIR, PNA, PRU, RRL, RSG, SBM, SFR, SLR, TGZ, TRY

Check them out!

It’s Official: Mum and Dad Investors Are OUT Of The Market

A recent study on debt showed quite a few interesting facts.  Firstly, Australia has 15 million credit card accounts in a country of 22 million people.  That is quite a lot of potential debt to be paying, some at up to 25% per annum or more.

But it was this next headline that I was most interested in:

“A Mere 5.5% of Australians Think Shares Are The Wisest Place To Put Their Savings”  This is the lowest reading on record. 

But is this good news or bad news for the stock market?  Personally, I think it could be a good thing.  Let me explain why:

When do the majority of retail investors participate in the stock market?  That’s right, it is usually during the “euphoria” stage when every man, woman and child is buying stocks and your taxi driver is giving you “hot tips”.

Likewise, when do most retail investors sell all their holdings and run for the hills?  Exactly – right at the very bottom when the pain is unbearable and at its worst.  It’s called Capitulation, and it can be a beautiful thing.  If we have the lowest reading on record of people believing Shares are a good place to invest, then we could be seeing capitulation in the works.  Historically, retail investors can be a good contrarian indicator of share market behaviour.

Trade Well, Trade Happy and Do Amazing Things

Have a great week everyone!  Hope the trends move in your favour and your losses are cut short quickly.

Dave McLachlan

September 16, 2012  Tags: , , , , , , , ,   Posted in: Market Analysis, Market Watch Weekly  No Comments

Shanghai, SP 500, All Ordinaries Trends And Australian Stock Buys

This Market Watch Weekly is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week we look at the Shanghai Composite (China) stock market trend – a big day on Friday but right off the bottom so it looks more like a “dead cat bounce”, at least for now.  In other words, “one up day does not an up-trend make”.

Then we look at America and the S&P 500, and its consolidation at previous highs.  This is a very common phenomenon in the market as value buyers sell, and momentum buyers buy (making the market stagnate for a period of time).  Of course, nothing stays the same forever, especially in the market, and it looks like we have a breakout to the upside as of Thursday, continuing the up-trend for now.

The All Ordinaries is doing a similar thing – consolidating around the Trend Line.  A breakout either way would confirm the direction it is likely to head.

Individual Stocks In Australia

Of course, I’ve been buying stocks in Australia over the last few months, using a combination of the Post Earnings Announcement Drift and my own trend following system.  Dividends have been aplenty, as have capital gains.  When you know where to look you can increase your probability significantly.  And that’s all trading and investing is, really.  Probability.  Increasing your probability, and finding low-risk setups to make the most of your hard-earned cash.

Of course if you don’t know what any of that means, it’s explained simply and specifically in the videos for the Entries and Exits and Risk Management modules at this site.

When You Make A Mistake, Correct It Quickly

Two mistakes I’ve made recently that everyone can learn from: Bradken (BKN) and Challenger (CGF).  Bradken shot up after its earnings announcement, but it was not in a strong sector.  I bought it, collected the dividend, and was forced to sell below break-even as the stock plummeted afterwards.

Challenger I bought with a trend following signal, but I didn’t realise that it had not yet reported its earnings!  When it did report its earnings, the price fell drastically.  Luckily I saw this and bailed quickly.

These are lessons for us all.  Cut your losses, cut your mistakes.  Have no ego about it, as holding on to your ego in this market will do nothing but send you to the poor house.

More Updates and Goodies

I’ve also updated:

And additionally, here is this week’s market watch!  Please enjoy!

http://youtu.be/FAp1uY7mtQM

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Hope you enjoy and have an amazing week in the markets!

Happy trending,

Dave McLachlan

 

September 8, 2012  Tags: , , , , , , , , , , ,   Posted in: Market Analysis  No Comments

Stock Market: What To Do If Things Go Pear-Shaped (Plus Margin Call, the movie)

This Market Watch Weekly is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week we look quickly at how to deal with a stock market that is falling, in a bear market or in a market crash.  It’s a very simple method but it can be extremely effective.

With talks of Greece, Italy and Spain likely to pick up over the next few months, we could see increased volatility in the market leading to falls, and this will help you be ready if that happens.

Also a great scene from Margin Call, the movie.  If you haven’t seen it yet, I highly recommend it!

http://youtu.be/vb14HiQ1Z_E

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Comment on the video in the comments section below!

Happy trending,

Dave McLachlan

August 26, 2012  Tags: , , , , , ,   Posted in: Market Analysis, Market Watch Weekly  No Comments